Why do market conditions matter when listing a home?

Staff WriterSeptember 5, 2018

If you’re considering selling your home, a Comparative Market Analysis (CMA) is a useful tool that your real estate agent can provide to learn what buyers recently paid for a home similar to yours. Determining a listing price, however, is much more involved. For that you need a solid understanding of your community’s market conditions, knowledge that is imperative in the home selling process.

Market conditions are formed by inventory levels and by buyer demand, the latter of which is affected by employment, incomes and mortgage rates. When inventory levels are low relative to buyer demand, it’s known as a sellers’ market and alternatively, when inventory levels are high relative to buyer demand, it’s a buyers’ market. It’s also possible to have a buyers’ and sellers’ market simultaneously within the same town — properties close to transit and amenities may be hot while back country estates may not be.

In trying to determine a listing price for your home, it’s important to study the market to know the market conditions. Market reports that cover historical sales data as well as information on current conditions such as number of active, closed and pending sales, are invaluable tools. These reports provide excellent insight for buyers and sellers alike to see the volume of properties that are moving and in what price ranges and neighborhoods, among other details.

There is an adage in real estate: the market is always right. In fact, market conditions often predict what buyers will do. As a result, in a hot market it’s often a smart idea to be a little more aggressive with your asking price. However, if the market is slow often the best strategy is to price even slightly under the market value to attract more showings and ultimately buyers.

By using your knowledge of the market, along with the expert guidance of your real estate agent, you’ll be able to price your home to sell quickly and for the most money possible.